Yes. A foreign company can sell in Spain without incorporating anything: the standard route is a Spanish non-resident tax number with the letter N and, where the operating model requires it, a Spanish VAT registration filed on census form 036. What forces the next step up is not turnover but permanent establishment.
That sentence settles the question and hides five intermediate rungs that are routinely confused. Between “we invoice a Bilbao customer from Milan” and “we incorporate a Spanish limited company” there are at least four distinct configurations, each with its own compliance package, its own running cost and its own exposure. This guide sets them out from lightest to heaviest and pinpoints the line that changes everything.
What are the actual options for selling into Spain?
There are five, from lightest to heaviest: direct sales with no registration at all, registration as a non-resident entity with an N-series tax number, the e-commerce one-stop-shop schemes, a branch, and a subsidiary. Only the last two involve filing anything at the Spanish Commercial Register.
| Option | Physical presence | Spanish tax number | VAT registration | Tax on profits in Spain | Relative running cost | PE exposure |
|---|---|---|---|---|---|---|
| Direct B2B sales under the reverse charge | None | No | No | None | Very low | Very low |
| Non-resident entity, N-series number plus VAT registration | None or minimal | Yes (letter N) | Yes | None on profit absent a PE | Low | Low, subject to review |
| OSS or IOSS one-stop shop (e-commerce) | None | Not in Spain if identified elsewhere | Yes, in the State of identification | None in Spain | Low | Low |
| Own stock in a Spanish warehouse or 3PL | Goods only, no staff | Yes | Yes, mandatory | Depends on the PE analysis | Medium | Medium |
| Branch | Yes, registered | Yes (letter W) | Yes | Corporate income tax on attributable profit | Medium to high | PE by definition |
| Subsidiary (SL or SA) | Yes, Spanish company | Yes (letter B or A) | Yes | Corporate income tax on its own result | High | Not applicable, it is resident |
Direct sales with no Spanish footprint
The cheapest configuration and the most frequently overlooked. Where a foreign company supplies goods or services to a business established in Spain, art. 84.Uno.2 of the Spanish VAT Act 37/1992 shifts the taxable person status to the customer: the Spanish buyer self-assesses the VAT on its own return. The foreign supplier issues an invoice without Spanish VAT, without a Spanish tax number and without any Spanish census obligation.
Plenty of companies register in Spain without needing to, simply because nobody tested whether the reverse charge applied. An unnecessary registration is not cost-free: it brings periodic returns, deadlines and penalties for formal breaches that would otherwise never have existed.
Registration as a non-resident entity with an N-series number
Where the reverse charge does not cover the model, the foreign company applies for a Spanish tax identification number. Order EHA/451/2008 governs how these numbers are composed and reserves the letter N for foreign entities and the letter W for permanent establishments of non-resident entities. The letter itself therefore tells the tax authorities whether a PE exists.
Once the number is issued, the VAT registration is filed on census form 036. The company remains non-resident: no Spanish statutory books, no accounts filed at the Commercial Register, but it now sits inside the Spanish Tax Agency’s return cycle.
Branch
A branch is an extension of the foreign parent without separate legal personality, registered at the Commercial Register under Royal Decree 1784/1996. It is a permanent establishment by definition: it pays corporate income tax on the profit attributed to it and must file the parent company’s own accounts at the Spanish register. That last point is usually what kills the branch option for groups that would rather not publish consolidated financials in Spain.
Subsidiary
A subsidiary is a Spanish company in its own right, typically an SL. Since Act 18/2022 the minimum share capital of an SL is EUR 1, subject to allocating 20% of profit to the legal reserve until reserves plus capital reach EUR 3,000. It ring-fences liability, makes local hiring straightforward and unlocks Spanish public tenders and bank finance. It also carries the highest recurring cost of the five. The full comparison sits in the analysis of branch or a subsidiary.
When does a Spanish VAT registration become mandatory?
It becomes mandatory the moment the foreign company itself has to charge Spanish VAT, and it stays unnecessary while the Spanish customer picks up that obligation under the reverse charge. Everything else follows from that one rule.
The rule that decides: the reverse charge
The mechanism sits in art. 84.Uno.2 of VAT Act 37/1992, transposing Directive 2006/112/EC. Two conditions must hold at once: the supplier is not established in the Spanish VAT territory, and the customer is a business or professional that is. Where they do, the customer accounts for the VAT and deducts it in the same return, so the cash effect is neutral.
The four scenarios that force a registration anyway
The reverse charge does not cover everything. These four situations trigger a Spanish census filing even with no physical presence whatsoever:
- Sales to final consumers (B2C) where the goods are already in Spain. There is no business customer to shift the obligation to.
- Transfers of own goods into Spain. Moving stock from another Member State into a Spanish warehouse is treated as an intra-Community acquisition under art. 17 of Directive 2006/112/EC. It requires a Spanish VAT number and registration in the intra-Community operators register.
- Importing in the company’s own name from a third country, with release for free circulation in Spain.
- Supplies where the customer is not established in the Spanish VAT territory either, subject to the service rules in art. 69 of VAT Act 37/1992.
The recurring obligations that switch on from this point are set out in the guide to VAT compliance for multinational groups.
When is a fiscal representative compulsory in Spain?
For an EU-established company it is not. For a company established outside the EU it is, subject to narrow exceptions, and that asymmetry is the single biggest practical difference between trading into Spain from Milan and trading into Spain from Dubai or Seoul.
EU-established companies
A company established in another Member State deals with the Spanish Tax Agency directly: it obtains its tax number, files its own returns and reclaims Spanish input VAT through the electronic portal of its own Member State under the Directive 2008/9/EC procedure. Appointing a representative is an operational choice, not a legal requirement.
Companies established outside the EU
Art. 164.Uno.7 of VAT Act 37/1992 requires non-EU taxable persons to appoint a representative for the purposes of complying with the Act. Three exceptions apply: establishment in the Canary Islands, Ceuta or Melilla; establishment in a State with mutual assistance instruments equivalent to those in force within the EU; or use of the one-stop-shop special schemes.
The second exception causes the most trouble, because the list of States with an equivalent mutual assistance instrument is short and it moves. Before assuming a non-EU parent is exempt, the position should be checked for that specific jurisdiction. A tax representative in Spain covers both the statutory requirement and the day-to-day interface with the Spanish Tax Agency where the parent has no resources in the country.
What is the intra-Community operators register and when is VIES registration needed?
The intra-Community operators register, known in Spain as the ROI, is what puts a company’s number into the European Commission VIES register with the ES prefix. Until it appears there, no supplier in another Member State will invoice the company without VAT.
Form 036 and the ES-prefixed VAT number
Registration is requested by ticking the relevant box on form 036. It is not automatic. The Spanish Tax Agency may ask for evidence of genuine economic activity before granting it, and both refusals and later removals for inactivity are common. This step should be planned with slack in the timetable, because it gates the entire intra-Community operating model.
The deadline has express statutory backing: article 25.1 of the General Regulation on tax management and inspection procedures provides that “if the State Tax Administration Agency has not resolved within three months, the assignment of the requested number may be deemed refused“. Negative silence, in other words, and it belongs in the entry timetable from the start.
Form 349 and Intrastat
Two reporting obligations follow, and they are constantly confused with one another:
- Form 349 is a recapitulative statement of intra-Community transactions, a tax filing derived from art. 262 of Directive 2006/112/EC. It has no threshold: it is due from the first transaction.
- Intrastat is a statistical declaration of the physical movement of goods, not a tax return. The Spanish exemption threshold is set at EUR 400,000 per year, applied separately to arrivals and to dispatches, per the Spanish Tax Agency Intrastat filing rules.
How do the OSS and IOSS schemes work for selling into Spain?
OSS lets a seller declare the VAT on all its intra-Community distance sales in a single Member State of identification, avoiding a registration in every destination country. IOSS does the same for distance sales of goods imported from third countries in consignments with an intrinsic value not exceeding EUR 150.
OSS and the EUR 10,000 threshold
Since 1 July 2021, following the transposition carried out by Royal Decree-Law 7/2021, a single EUR 10,000 annual threshold applies to the combined total of intra-Community distance sales and electronically supplied services to consumers in other Member States. Below it, origin-country VAT applies. Above it, destination-country VAT applies, and OSS is the vehicle for declaring it without a local registration.
Registration uses form 035 and the return is form 369, both described in the Spanish Tax Agency guidance on VAT and e-commerce where Spain is the Member State of identification.
IOSS and the EUR 150 consignment limit
IOSS covers distance sales of imported goods in consignments whose intrinsic value does not exceed EUR 150. The seller charges the buyer’s country VAT at the point of sale and reports it monthly; in exchange the import itself is exempt. A seller not established in the EU generally has to appoint an EU-established intermediary to use IOSS, unless its State has a mutual assistance agreement with the EU.
What OSS does not cover
This is the point that catches out almost every growing online retailer: OSS only covers sales where the goods depart from another Member State. As soon as the retailer places stock in a Spanish warehouse, including a contracted third-party logistics facility, those sales stop being intra-Community distance sales and become domestic Spanish supplies, outside OSS. A Spanish VAT registration, form 303 and the rest of the package follow. It is by far the most common trigger of an unplanned Spanish registration.
Does stock in a Spanish warehouse or 3PL create a permanent establishment?
On its own, usually not, but it triggers a VAT registration regardless. Answering this properly means splitting one question into two, each governed by a different rule: is there a VAT obligation (almost always yes) and is there a permanent establishment for direct tax purposes (usually no, where the warehouse belongs to an independent third party).
What Spanish domestic law says
Art. 13.1.a of Royal Legislative Decree 5/2004, the consolidated Non-Resident Income Tax Act, expressly lists warehouses among the places that constitute a permanent establishment, alongside management offices, branches, offices, factories, workshops, mines and construction, installation or assembly sites lasting more than six months. Read in isolation, the provision is extremely wide.
What the treaty says, and why it prevails
Where a double tax treaty exists between Spain and the parent’s State, the treaty definition prevails over the domestic one. Art. 5 of the OECD Model Convention, followed by virtually every Spanish treaty, expressly carves out the use of facilities solely for the purpose of storing, displaying or delivering goods, as an activity of a preparatory or auxiliary character. The same article raises the construction-site threshold from six months to twelve.
The practical consequence is clean. A German or Italian distributor with goods in a Spanish warehouse normally has no PE, while a company from a State with no treaty in force with Spain is exposed to the far more aggressive domestic definition. Confirming the parent’s treaty position, with a valid tax residency certificate in hand, is the first step of the analysis set out under permanent establishment risk.
It is worth pinning down what Spain chose, because the Multilateral Instrument leaves options open. In the notifications deposited with its instrument of ratification, Spain opted for Option A of article 13.1, the one that requires the listed activities to be genuinely auxiliary or preparatory in order to fall outside a permanent establishment. And it entered no reservation to article 13, unlike Luxembourg or Singapore, so the anti-fragmentation rule in article 13.4 applies to Spain.
The dependent agent, the other trigger
The second way the line gets crossed has nothing to do with buildings and everything to do with people. Where someone habitually acts in Spain on behalf of the foreign company with authority to conclude contracts in its name, there is a PE even with no office at all. Following BEPS Action 7, the definition also reaches anyone who habitually plays the principal role leading to the conclusion of contracts that the parent then signs without material modification. A self-employed Spanish sales agent with closing authority is, on that test, considerably more dangerous than a warehouse.
VAT fixed establishment: a separate concept
The two should not be blurred. For VAT purposes, art. 11 of Implementing Regulation (EU) 282/2011 defines a fixed establishment as one characterised by a sufficient degree of permanence and a suitable structure in terms of human and technical resources. A warehouse with no staff of the company’s own does not meet it. A company can therefore carry Spanish VAT obligations while having neither a VAT fixed establishment nor a corporate tax PE.
Call-off stock: the simplification that avoids registration
There is a specific way out. The call-off stock regime introduced by Directive (EU) 2018/1910 into art. 17a of Directive 2006/112/EC allows goods to be moved to Spain for an already identified customer without the transfer triggering an intra-Community acquisition in the seller’s hands, provided the supply takes place within twelve months and the prescribed register is maintained. Applied properly it avoids a Spanish registration altogether. Applied loosely, the obligation revives retrospectively.
Worked example: an Italian industrial distributor with third-party warehousing in Valencia
A concrete profile shows how the pieces fit. An Italian industrial distributor, tax resident in Italy, with no staff in Spain. It sells components to 18 Spanish industrial customers, all of them VAT-registered businesses. Annual sales into Spain: EUR 2.4 million. To shorten lead times it contracts an independent logistics operator in Valencia and keeps average stock of EUR 350,000 there, replenished from its own warehouse in Bergamo. All orders are closed from Italy; nobody in Spain has signing authority.
The analysis comes out as follows:
- VAT registration: yes. Moving its own goods from Italy to Valencia is a transfer of own goods treated as an intra-Community acquisition. It needs an N-series tax number, a form 036 census filing and registration in the intra-Community operators register.
- Sales to the 18 Spanish customers: no Spanish VAT charged. Even though the goods ship from a Spanish warehouse, the customers are established businesses and the art. 84.Uno.2 reverse charge applies.
- Form 349: yes, from the first transfer. Intrastat: yes, because annual arrivals comfortably exceed the EUR 400,000 threshold.
- Spanish corporate income tax: no. The Spain-Italy treaty excludes auxiliary storage, the warehouse belongs to an independent operator and is not at the distributor’s disposal, and there is no dependent agent with authority to contract.
- Latent risk. If the logistics operator starts handling returns, customer service or delivery negotiations, or if the distributor hires a Spanish sales agent with closing authority, the analysis flips and Spanish corporate income tax on attributable profit appears.
- Alternative worth testing. If the 18 customers were stable with scheduled orders, the call-off stock regime could avoid even the Spanish VAT registration.
Running this configuration costs a fraction of a subsidiary, and direct tax exposure is nil for as long as the PE line is not crossed. It is precisely the case where registering as a non-resident is the right answer and incorporating would be over-engineering.
What documents does the Spanish Tax Agency require from the head office?
It requires evidence of the foreign entity’s existence, of its representation and of its tax domicile, under Royal Decree 1065/2007. The real bottleneck is almost never the Spanish side: it is document legalisation in the country of origin.
| Step | Route or form | Key head office documentation | Indicative timing in practice |
|---|---|---|---|
| Provisional non-resident tax number (letter N) | Electronic application to the Spanish Tax Agency | Commercial register extract from the home jurisdiction, constitutional documents, representative’s identity document | Days, with complete papers |
| Power of representation | Notarised power of attorney | Power granted before a home-country notary, carrying an apostille | Weeks, driven by the notary and the consulate |
| VAT census registration | Form 036 | Assigned tax number, description of the activity, business activity code | Days |
| Intra-Community operators register and VIES | Form 036, dedicated box | Evidence of genuine intra-Community activity | Weeks, with a possible prior information request |
| Appointment of a fiscal representative | Form 036 | Express acceptance by the representative | Days |
| OSS or IOSS registration | Form 035 | Identification details and Member State of identification | Days |
| Branch registration | Commercial Register | Parent company accounts, board resolution, public deed | Weeks |
| Subsidiary incorporation | Notary and Commercial Register | Name reservation certificate, beneficial ownership details, capital contribution | Weeks |
The final column reflects normal practice, not statutory deadlines.
Apostille and sworn translation
Every foreign public document intended to produce effects in Spain needs a Hague apostille where the issuing State is a party to the Convention of 5 October 1961, or full diplomatic legalisation where it is not. On top of that, both the Spanish Tax Agency and the Commercial Register require a Spanish translation produced by a sworn translator. This is the step that most often delays a registration the Spanish side would resolve in days.
Beneficial ownership and anti-money-laundering checks
Any Spanish notarial act, and any Spanish bank account opening, requires identifying the foreign parent’s beneficial owner down to a natural person. In structures with several holding layers, the group chart and ownership certificates should be prepared before the process starts rather than when the notary asks for them.
What are the ongoing obligations once registered?
VAT and the associated reporting, and nothing in the way of Spanish statutory accounting for as long as there is no permanent establishment. That gap in recurring cost is what justifies not incorporating until the business genuinely calls for it.
| Obligation | Form | Frequency | Applies to |
|---|---|---|---|
| VAT return | 303 | Quarterly, or monthly where prior-year turnover exceeds EUR 6,010,121.04 or the company is in the monthly refund register | Non-residents registered for VAT |
| Annual VAT summary | 390 | Annual | Non-residents registered for VAT |
| Recapitulative statement | 349 | Monthly or quarterly by volume | Companies in the intra-Community operators register |
| Trade in goods statistics | Intrastat | Monthly | Once the exemption threshold is exceeded |
| One-stop shop return | 369 | Quarterly for OSS, monthly for IOSS | Companies using the schemes |
| Corporate income tax | 200 | Annual | Only where a permanent establishment exists |
| Non-resident income without a PE | 210 | As income accrues | Income subject to non-resident income tax without a PE |
Digital sellers should also test whether they fall within the Spanish digital services tax under Act 4/2020, which applies 3% to certain online advertising, digital intermediation and data transmission revenue, and which only catches groups exceeding EUR 750 million in worldwide revenue and EUR 3 million in Spain-attributable digital revenue at the same time.
When is it worth moving up to a branch or a subsidiary?
It is worth it once a permanent establishment already exists in substance, once local staff have to be hired, or once customers or the market require a Spanish entity. Outside those three cases, the light structure is usually the better financial decision.
Four indicators should trigger a review:
- Staff in Spain with authority to close business. If that exists, there is probably already a PE, and the question is no longer whether to incorporate but how to regularise.
- Local employment. An employee can be registered with Spanish social security without a Spanish entity, but the mechanics are awkward and the administrative cost approaches that of a subsidiary anyway.
- Public tenders, certifications or customers that insist on a supplier with a Spanish tax number. This is a commercial requirement rather than a tax one, and it is frequently the real driver of the decision.
- Liability ring-fencing, driven by the product or the contract profile.
Once that point is reached, the choice between the two forms turns mainly on two axes: publicity of the parent’s accounts, which a branch imposes and a subsidiary does not, and the treatment of early-stage losses. The practical route map is set out in the guide to setting up and running a Spanish subsidiary and in the branch and subsidiary formation service page.
For a group starting to sell into Spain without certainty about the volume it will reach, the sensible sequence is staged: sell under the reverse charge for as long as that works, register as a non-resident when stock or final consumers appear, and incorporate only once the business already exists. Doing it the other way round, incorporating first “to be ready”, is the most common way of paying for years for a structure that is not yet needed.
